In this week’s Business News: the Czech Republic’s industrial output outpaces the EU average; Czech car manufacturer Škoda achieves a historic sales record; one in three German investors would no longer choose the Czech Republic as a place for investments today; the CEO of a troubled lottery company offers a cash reward for information on persons behind a prank; and the Czech restaurants’ association protests the discontinuation of tax incentives for meal tickets.
According to data published by the Czech Statistical Office, Czech industrial output is exceeding the EU average, with a growth of 13 percent year on year in February. In the previous months, it had already been on the rise, with 16.4 and 12 percent in January and December, respectively. The car industry is the single fastest growing production branch, with an increase of 26.4 percent in February. Foreign demand is still outgrowing domestic demand; experts predict that exports will continue to be an important factor for the country’s industrial output in the coming months and say that we are likely to see an improvement on the jobs market.
The Czech-based, German-owned car manufacturer Škoda sold a record number of 85, 000 vehicles in March, which is the highest amount of cars the company has ever sold in a single month. Škoda has had a strong start this year, with its sales increasing by over 21 percent in the first quarter of 2011. Škoda further consolidated its position as market leader, with a share of 30.6 percent of the market, and a total of 217,000 vehicles sold in the first quarter of the year. Russia, India and China account for the majority of its car sales. On the domestic market, the Octavia Combi is by far the most frequently sold model, where it is the market leader in the station wagon segment. In 2010, Škoda Auto saw a net profit of roughly 350 million euro, or 8.5 billion Czech crowns.
Among German investors, frustrations with business conditions in the Czech Republic are on the rise, finds a recently published survey by the Czech-German Chamber of Commerce. Among the key complaints of the 73 investors polled are poor payment morale, the lack of legal protection as well as inadequate transparence of public tenders. However, roughly two thirds say that they consider the current economic situation satisfactory. About one in two companies expect a rise in revenue this year. Roughly a third responded that their exports to Germany had increased in 2010. German companies are the most significant foreign investor group in the Czech Republic.
Troubles surrounding lottery and betting giant Sazka continue. Finance Minister Miroslav Kalousek sent a team of auditors into Sazka on Monday, to determine if documents had been forged and whether its CEO Aleš Hušák had illegally taken money out of the company. Meanwhile, Hušák is reportedly offering an award of 200,000 Czech crowns for information on who is behind hanging three figures of athletes, along with a banner that accuses him of being a “gravedigger” of sports, from a bridge near the company’s headquarters. In exchange for being allowed to run lotteries, Sazka is obliged to fund sports associations.
Sazka has run into solvency problems mainly due to repayments for a giant sports hall, the O2 Arena, built in Prague in 2004 for the world ice hockey championships. The lottery giant recently had trouble paying its jackpot winners; the Municipal Court of Prague declared the company bankrupt in late March.
If tax incentives for offering employees meal tickets as part of their salary package are discontinued as planned, restaurants could experience a significant decrease in sales, says the Czech association of hotels and restaurants. It has called on its members to oppose the planned change in law, which it says would further strain a sector that has already come under severe financial pressure due to the economic crisis and an increase in VAT. According to a recent survey by the Gfk agency, 70 percent of respondents would limit their number of restaurant visits if they no longer received meal tickets, which could lead to losses of roughly 7.5 billion Czech crowns in sales and some 30,000 jobs in the hospitality sector.
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